Iraq’s oil exports have averaged more than 3.4 million barrels per day so far in October, Oil Minister Bassem Mohammed Khudair told the state news agency INA on Monday. That puts them close to the 3.3-3.5 million bpd Iraq shipped before the war with Iran choked traffic through the Strait of Hormuz.
The October figure is a jump of about 750,000 bpd from September, when exports averaged 2.65 million bpd according to the oil ministry. Of that, 250,000 bpd moved through the Iraq-Turkey pipeline to Ceyhan. Khudair said Iraq is now exporting through three routes: the Strait of Hormuz, Ceyhan, and tanker trucks through Syria. Syrian Petroleum expected the first trucks carrying Iraqi crude to reach a Mediterranean port by mid-October. Most of Iraq’s crude still leaves the southern terminals at Basra and crosses the strait.
Baghdad has started delivering its own crude past Hormuz. Buyers want cargoes handed over outside the strait to avoid war-risk premiums, and the state-owned Iraqi Oil Tankers Company has shipped 2 million barrels through the strait on a very large crude carrier. It was the first time in decades that the state marketer, SOMO, had seen its own crude moved past Hormuz. Under the free-on-board model Iraq has relied on, buyers collect cargoes at Basra and carry the transit risk themselves. The tanker company is now in talks to buy its own crude tankers.
The recovery follows months of heavy losses, with southern output falling about 70% to roughly 1.3 million bpd in the early months of the war. Foreign Minister Fuad Hussein put Iraq’s losses at about $60 billion last week. Foreign currency reserves have fallen by $20 billion, and the central bank has devalued the dinar against the dollar for the first time in more than three years. Oil provides about 90% of government revenue.
Baghdad plans to raise export capacity to 5 million bpd once new pipelines to Fishkhabour and the Syrian port of Baniyas, along with new export terminals at Hormuz, are completed.
By Charles Kennedy for Oilprice.com
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